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. Author manuscript; available in PMC: 2018 Dec 1.
Published in final edited form as: J Health Econ. 2017 Dec;56:237–255. doi: 10.1016/j.jhealeco.2017.05.004

Table 3.

Estimated Measures for Simulated Payment Systems

Measure ACA 2017 Alternative
Payment System Fit: ϕ 0.423 0.727
(.414, .433) (.711, .743)
Incentives to Distort Benefits: 0.944 0.941

Notes: Shown are point estimates (and confidence intervals) for measures of the inefficiency of the given payment system. For each measure, 1 implies complete elimination of the inefficiency and 0 implies no reduction in inefficiency. Premium fit is the portion of the variance in costs explained by premium categories. Payment system fit is the portion of the variance in costs explained by variation in premiums and transfers. The measure of incentives to distort benefits captures the welfare loss from benefit distortions. Services are defined as inpatient, outpatient, and prescription drugs. ACA 2017 is concurrent risk adjustment + federal age curve; Alternative is Prospective risk adjustment (with 50% “new enrollees” assigned age/gender risk scores) + federal age curve + reinsurance.